THIS REPORT WAS PREPARED BY FAUSTO MOURA, A MASTERS IN FINANCE STUDENT OF THE NOVA SCHOOL OF BUSINESS AND ECONOMICS, EXCLUSIVELY FOR ACADEMIC PURPOSES.THIS REPORT WAS SUPERVISED BY ROSÁRIO ANDRÉ WHO REVIEWED THE
M
ASTERS IN
F
INANCE
E
QUITY
R
ESEARCH
§ Recent acquisition to completely transform Oceana’s
operations: it is expected that U.S. Daybrook division contributes
24% for FY2016E revenues and 37% for FY2016E EBIT. Moreover, this acquisition softs the hard currency exposure of Oceana and increases the overall profitability of the group.
§ Higher maize prices to benefit Lucky Star brand: the
recent inflation on the main inputs of chicken production increased dramatically the chicken prices. It is expected a substitution effect, making consumers shifting their consumption towards fish. It allows Oceana to push prices higher without scarifying volumes.
§ Increased risks in the horse mackerel division:
Oceana’s HM quota in Namibia is under a real threat, with the continuing effort of the government in reallocating quota to other new right holders. Moreover, the scarcity of horse mackerel in South Africa is also expected to negatively impact the division.
§ Oceana is positively impacted by a weaker ZAR
(Rand): the last year has shown an increasing exchange rate
USD/ZAR until the peak on January 2016. The forward multiples show that this FX rate is expected to increase, which benefits Oceana’s results given that Daybrook financial figures are translated to the home base (South Africa) at a higher exchange rate. However, we should be aware of a different path in the future due to improvements in the South African economy, driven by stabilization of key commodities, and a more stable political outlook.
Company description
Oceana Group is the largest fising company in South Africa with operations in Africa and U.S., and selling its products to consumers all across the world. It is publicly traded in both Johanesburg (JSE) and Namibian (NSX) stock exchanges.
O
CEANA
C
OMPANY
R
EPORT
A
GRICULTURAL PRODUCERS
MAY 2016
S
TUDENT
:
F
AUSTO
M
OURA
22812@novasbe.pt
A consolidation year
…
with full contribution of Daybrook.
Recommendation: Buy
Price Target FY16: R 128.72
Price (as of 22-May-16) R 114.7
Reuters, Bloomberg.
52-week range (€) R 81 – R 134.7
Market Cap (€m) R (mn) 15 541
Outstanding Shares (m) 135.53
Source: Reuters, Bloomberg.
Source: Bloomberg.
(Values in R’million) 2015 2016 2017
Revenues 6,169 8,454 9,241
EBITDA 1,184 1,865 2,031
Net Profit 642 967 1,060
EPS 5.32 7.19 7.89
DPS 3.72 5.68 6.64
P/E 17.69 16.75 15.28
Net Debt 3,193 3,357 3,272
Source: Company Data and Analyst Estimates. 80.00$
100.00$ 120.00$ 140.00$ 160.00$ 180.00$ 200.00$
5/6/13$ 7/6/13$ 9/6/13$11/6/13$ 1/6/14$ 3/6/14$ 5/6/14$ 7/6/14$ 9/6/14$11/6/14$ 1/6/15$ 3/6/15$ 5/6/15$ 7/6/15$ 9/6/15$11/6/15$ 1/6/16$ 3/6/16$ Oceana&vs.&Jalsh&Returns&(base&100&April&5,&2013)&
OCEANA COMPANY REPORT
Table of Contents
Company overview ... 3
Recent Updates from 2015 ... 4
Shareholder structure ... 5
Fishing Industry Analysis ... 5
Protein Consumption ... 5
Fish Consumption ... 5
Aquaculture Production ... 6
Fishmeal and Fish Oil Evolution ... 6
Fishmeal and Fish Oil Prices ... 7
Macroeconomic Environment Analysis ... 7
Global Outlook ... 7
South African Outlook ... 8
Impact of Macroeconomic Scenarios in Oceana ... 8
Segmental Report ... 8
Inshore Fishing ... 9
Lucky Star ... 9
Lobster, Squid and French Fries ... 14
Blue Continent Products ... 16
Daybrook ... 20
Commercial Cold Storage ... 24
Valuation ... 26
Main Drivers of Each Segment ... 26
Other Operating Drivers ... 26
WACC Assumptions ... 27
Terminal Value Growth Assumptions ... 29
Scenario Analysis SOTP Results ... 30
Multiples Valuation ... 30
Appendix – Financial Statements ... 31
OCEANA COMPANY REPORT
Company overview
Oceana Group is the largest fishing company in South Africa and one of the most important players on the Namibian fishing industry. Incorporated in 1918, the group is publicly traded in both Johannesburg (JSE) and Namibian (NSX) Stock Exchanges, having seen very strong annual performances during the last years (see exhibit 1). Oceana is a blacked owned company and a level 2 B-BBEE1 contributor. The company provides employment to 6053 employees, of whom 4399 are directly employed. Additionally, the group was nominated as the most empowered publicly listed company in South Africa consecutively for two years, 2014 and 2015.
Regarding its operating structure, Oceana’s core fishing business is the catching, processing, marketing and distribution of fishmeal, fish oil, canned fish, horse mackerel and hake, lobster and squid. These final products are the combination of inshore fishing sourcing for pelagic fish (gulf menhaden, anchovy, redeye herring and pilchard), mid-water fishing sourcing (horse mackerel) and deep-sea trawling sourcing (hake). In 2015, the majority of sales came from the inshore fishing division (62%), followed by the mid and deep water fishing (23%) and the remaining from the other two operating divisions (see exhibit 2).
Oceana supplies fish and other fish derivative products to consumers all across the consumer spectrum in Africa, USA, Asia, EU and Australia. It includes the supply of fish not only to the lower-end consumer (canned fish and fishmeal) but also to the upper-end consumer (lobster, hake and premium canned fish) and to other fishing activities such as aquaculture (fishmeal and fish oil). In terms of revenues, in 2015, the majority of sales came from South Africa and Namibia (59%), followed by other markets in Africa, Europe, USA and Far East (see exhibit 3). Revenues to the Far East and Europe are driven by exports from South Africa and U.S.2
In order to follow its core operating fishing activities, Oceana operates and sells through four main divisions, which are represented by the following brands of the group – Lucky Star, Blue Continent Products (BCP), Oceana Lobster, Squid and French Fries and the recently acquired Daybrook Fisheries. Furthermore, it is also important to refer to a fifth division - Commercial Cold Storage Logistics (CCS) –, which provides refrigerated warehouse facilities in Cape Town, Durban, Johannesburg and Walvis Bay (see exhibit 4). Besides the fact that it is the largest fishing in South Africa, there is some competition
1
B-BBEE (Broad-Based Black Economic Empowerment) is an initiative from the South African government to promote the fairly participation of black individuals in the economy. 2
This data includes Daybrook results for the last three months of Oceana’s financial year – acquisition made on June 2015 vs. Oceana’s financial year ending at 30 September.
0" 2000" 4000" 6000" 8000" 10000" 12000" 14000"
5/5/05" 5/5/06" 5/5/07" 5/5/08" 5/5/09" 5/5/10" 5/5/11" 5/5/12" 5/5/13" 5/5/14" 5/5/15" JSE,%Oceana%Stock%Performance%(ZAc)%%
Source:(Bloomberg.
Exhibit'2.'Oceana'Segmental'Revenue'Split,'2015'(%).
Source:(Company(Data.
62%$
21%$ 7%$
9%$
Oceana$Segmental$Revenue$Split,$2015$(%)$
Inshore$Fishing$ Mid$and$Deep$Water$Fishing$ Commercial$Cold$Storage$ Daybrook$
Exhibit'3.'Oceana'Geographical'Revenue'Split,'2015'(%).
Source:(Company(Data.
59%$ 13%$ 10%$
9%$ 9%$
Oceana$Geographical$Revenue$Split,$2015$(%)$
South$Africa$and$Namibia$ Other$Africa$
Europe$ Far$East$
US$and$Canada$
Exhibit'4.'Oceana'Group'Brands.
Source:(Company(Data.
OCEANA COMPANY REPORT
from other S.A. fishing companies (Sea Harvest, Viking Fishing and Premier Fishing) that Oceana has to deal with.3
Recent Updates from 2015
For Oceana, the financial year of 2015 was a truly transformative one, largely explained by the recent acquisition of the private U.S. based Daybrook Fisheries (see Daybrook segmental report). This move aimed at diversifying the revenue streams in terms of (1) targeted species and products - fishmeal and fish oil based on the gulf menhaden species caching, (2) markets - new geographical revenue from U.S., (3) increase in margins - Daybrook is a highly profitable company compared to the whole group, and (4) increasing hedge rand qualities – it softens the hard currency exposure of Oceana to depreciations in ZAR.
In the past, Oceana has tried to convert all its resources into shared value to all its stakeholders, including shareholders (strong returns shown in exhibit 1 and stable dividend payout policy), employees (number of employees increased from 1849, in 2012, to 4399, in 2015, and reinforcement of Oceana Empowerment Trust), customers, suppliers and the communities in which it operates. This outcome has been achieved through organic growth and acquisitions in South Africa in the recent past4, which seemed to have been effective, given the 10% CAGR 10-14 on revenues and the 16% CAGR 10-14 on HEPS. However, due to the recent scarcity of locally available fishing biomass (translated into conservative TACs5 attributed by the governments), the possible loss of quota attributable to the company on certain operating divisions (which may impact negatively revenues because the company has less fishing opportunities) and problems with regulation and competition authorities, Oceana was “forced” to find other sources to drive its growth and diversification, hence management took an extensive analysis of growth opportunities outside South Africa,
Indeed, the management concluded that opportunities in Africa did not show the desirable potential and then it took the decision of acquiring the U.S., Louisiana-based, Daybrook Fisheries. This acquisition was in line with the comprehensive analysis of global fishing trends and markets made by the directors. They have concluded that increased exposure to fishmeal and fish oil (core products of Daybrook) was a key driver for generating growth, believing on the expansion of the aquaculture industry, which has been presenting high capture annual growth rates (see exhibit 5).
3
Mostly private companies, thus very limited public information. 4
Acquisition of Lusitania’s fishing rights (2011) on hake, horse mackerel and south coast lobster, and FoodCorp’s fishing rights (2014) on hake, south coast lobster and pelagic fish.
5
Total Allowable Catches (TACs) are catch limits, which are expressed in tons or numbers, that are set for almost all comercial fish stocks by local governments.
“(…) increased exposure to
fishmeal and fish oil presents the most exciting potential for long-‐ term growth.” (Francois Kuttel, Oceana CEO, 2015)
Delivering significant returns to shareholders, job creation, supply of the most affordable form of animal protein and responsible fishing practices…
Exhibit'5.'Average'Annual'Growth'Rates'of'Capture'and' Aquaculture'Production,'1960D2009.
−2 0 2 4 6 8 10 12
1960–69 1970–79 1980–89 1990–99 2000–09 Capture Aquaculture
P
ercent
OCEANA COMPANY REPORT
Shareholder structure
The major shareholder of Oceana is Tiger Brands Limited6, which has 42.1% of total shares in issue, followed by Brimstone7, which has also a significant percentage (16.8%) of the total shares outstanding. Lastly, 10.2% of the total number of shares in issue are held by the Oceana Empowerment Trust8 (see exhibit 6).
Fishing Industry Analysis
This section of the report aims to present the recent and expected trends (of the fishing industry) that may have an impact on the operations of Oceana. Given that it is a company with interests on the majority of the globe (not only due to the local operations but also to exports), it is important to design an outlook of what is the global environment in which Oceana is operating.
Protein Consumption
During the last years the protein food market has experienced a significant expansion, essentially explained by population growth, higher living standards, strengthening of the urbanisation and globalization processes, higher number of opportunities for trade and distribution and a recent trend of change in diets. In its report, the W.R.R. emphasizes that there is a 69% gap between crop calories produced in 2006 and the ones need by 2050 (see exhibit 7), which means that there is room for great improvements on the protein food market. On this matter, it is also expected that global population increase to 9.6 billion people by 20509, fact that together with the increasing role of middle class in large economies, such as China and India, may drive further growth in demand for protein sources.
Fish Consumption
The evolution of fish consumption is also in line with the previously stated increase in protein consumption. According to the OCDE/F.A.O.10, worldwide fish consumption per capita will increase to 21.5kg (see exhibit 8), pushed by increasing living standards, expansion of fish production and more developed distribution channels. The analysis of the graph allows us to confirm that it is expected an increase on fish consumption on all continents, which impacts Oceana in the sense that it sells to consumers all across the world. On the exhibit 9, it is possible to confirm that there is a prediction that meat
6
Tiger Brands Ltd. is a manufacturer of branded food products in sub-Saharan African, being focused on a wide range of categories, including food, home and personal care products. It is the largest food company in South Africa, having also interests in other international food companies.
7
Brimstone Investment Corporation is an investment holding company and its business segments include fishing, insurance, clothing and investments.
8
It was established in 2006 to enhance the group’s strategy and it provides a key mechanism for the employees to grow with the company and to benefit from their work.
9
UN Department of Economic and Social Affair World Population Prospects: the 2015 Revision. 10
F.A.O., Aquaculture Research – World Review of Fisheries and Aquaculture, 2014.
Exhibit'6.'Oceana's'Shareholder'Structure,'as'at'30'Sept.'2015.
42.1%&
16.8%& 10.2%& 30.9%&
Oceana's&Shareholders&Structure&(2015).&
Tiger&Brands& Brimstone& Oceana&Empowerment&Trust& Other& Source:(Company(Data.
According to the World Resources Report (W.R.R.) 2013-‐2014, more than 800 million people suffer from hunger…
Exhibit'7.'Food'Calories'Gap,'200692050.
0%# 20%# 40%# 60%# 80%# 100%# 120%# 140%# 160%# 180%#
2006A# 2050E#
Required(increased(in(food(calories(to(feed( 9.6(bn(people(
OCEANA COMPANY REPORT
consumption (fish substitute) will increase as well during the reference period 2012-2024. In Africa, meat and fish consumption per capita remains low, however we are expecting a higher increase in fish consumption, believing on the health conscious of consumers.
On the other hand, the increase in fishing consumption is not only explained by factors that are common to all protein sources. For instance, a 150g portion of fish provides about 50%-60% of an adult’s daily protein requirements, which is a significant number. Even more important than statistical facts, it is crucial to have a critical view on the evolution of fish consumption. Firstly, it is a healthy source of protein (in comparison, for instance, to meat), which is an increasingly relevant characteristic due to the recent changes in diets. Besides that, fish also provides people with a high-value of nutrients, including vitamins and omega-3.
Aquaculture Production
Throughout the last three decades, world aquaculture production has increased by about 1200%, from 5 million to more than 60 millions tons, including a CAGR of 6.2% during the period 2000-2012, while production increased from 32.4 million to 66.6 millions tons11. Considering the last three decades, the global production of fish from wild capture has only grown by 35%, from 69 million to 93 million tons. Having in mind the increasing demand for protein and the finite resources in the oceans, it is suggested an anticipated growth in production from aquaculture in the medium to long term. The point here is to know until which extent aquaculture production is sustainable, i.e., if there are enough natural resources that allow the industry to grow.
Fishmeal and Fish Oil Evolution
In its 2013 report12, the World Bank has also analysed the evolution of global fishmeal use, which has been changing sharply over the last decades. The growing importance of aquaculture as a user of fishmeal increased enormously. In 1960, minus than 2% of global fishmeal was used by
11
F.A.O., Aquaculture Research – World Review of Fisheries and Aquaculture, 2014.
12
World Bank, Fish to 2030 – Prospects for Fisheries and Aquaculture, 2013.
According to the FAO, in 2010, fish intake accounted for 16.7% of global population consumption of animal protein and 6.5% of all protein worldwide…
Low saturated fats and
cholesterol.
In 1984, aquaculture accounted only for 12% of world fish production, while, in 2009, the figure changed sharply to 46% (World Bank, 2013).
The World Bank forecast that total
production from aquaculture
equals the one from capture fisheries by 2030…
0 5 10 15 20 25 30 35
Oceania Asia North America Europe Latin America and
Caribbean
Africa World
kg/person/year
2012-14 2024
Exhibit'8.'World'Annual'Apparent'Fish'Consumption'Per'Capita.
0 10 20 30 40 50 60 70 80 90 100
2012
-14
20
24
2012
-14
20
24
2012
-14
20
24
2012
-14
20
24
2012
-14
20
24
2012
-14
20
24
2012
-14
20
24
2012
-14
20
24
North America Brazil European Union Latin America and Caribbean
World BRICS Asia and Pacific Africa kg/person/year
Poultry Pork Sheep Beef
Source:(OCDE/FAO. Source:(OCDE/FAO.
Exhibt'9.'World'Annual'Apparent'Meat'Consumption'Per'Capita.
OCEANA COMPANY REPORT
aquaculture. This figure changed over time and, in 2010, 73% of global fishmeal was used by the aquaculture industry as its main feed source (see exhibit 10). Given that it is expected an increase on aquaculture production, it is natural to conclude that demand for fishmeal increases as well (higher feed needs to follow industry’s evolution). There are some potential substitutes of fishmeal and fish oil as the main feeds for the industry, however those have some limitations such as, (1) they do not have the same high quality protein and amino acid content, (2) they are not available in enough volumes to substitute fishmeal as the main feed and to respond to aquaculture needs.
Fishmeal and Fish Oil Prices
According to the F.A.O.13, fish and other fish products are between the most traded food commodities, with almost 40% of global fish production being traded internationally. In fact, fishmeal and fish oil are both very commoditised products, thus it is important to look at the international reference Peruvian fishmeal price. In exhibit 11, it is possible to understand the volatility on the Peruvian fishmeal price. When analysing this volatility, it is crucial to analyse the market fundamentals that drive this phenomenon. Given declining growth rates on global production from capture fisheries, increasing demand for fish and the inexistence of real or comparable substitutes for fishmeal and fish oil as key feeds for aquaculture, the World Bank forecasted a real growth of 90% (implicit 4.5% CAGR) in fishmeal prices and a 70% real growth (implicit 3.5% CAGR) in fish oil prices, in the period 2010-2030.
Macroeconomic Environment Analysis
Global Outlook
Last year was another year of low confidence worldwide. There were signs of sustained recovery in the United Stated, however the European continent has been struggling with geo-political risks and increasing uncertainty related with the Grexit and the recent phenomenon of the Brexit. Regarding Asian markets, it is imperative to refer the volatility of equity markets in China, due to lower confidence of investors in the potential of the region. There is also another source of risks coming from the volatility of key commodities such as the oil (it seems to be recovering, after a sharp decrease in the second half of 2015). These volatile dynamics are also contributing to a lower confidence level all across the world (see exhibit 12).
13
F.A.O., State of World Fisheries and Aquaculture, 2012.
50%
36%
20%
48%
50%
5%
10%
73%
2% 4% 2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1960 1980 2010
Other Aquaculture Poultry Swine
Source:(World(Bank((2013),(Fish(to(2030.
It is essential for fish producers to
anticipate dynamics between
supply and demand to forecast the commodities prices in the future…
0" 500" 1000" 1500" 2000" 2500" 3000"
5/10/06" 5/10/07" 5/10/08" 5/10/09" 5/10/10" 5/10/11" 5/10/12" 5/10/13" 5/10/14" 5/10/15" Peruvian)Fishmeal)Price)(USD/ton))
Source:(Bloomberg.
Exhibit'10.'Global'Fishmeal'Use.
Source.(OCDE.
Exhibit 12. Consumer Confidence Level, 2015-2016.
OCEANA COMPANY REPORT
South African Outlook
South African economy outlook is just in line with global trends. Increasing electricity supply constraints, low global prices for key commodities (see exhibit 13 for platinum, a core commodity on S.A. economy) and the slow growth of global economic recovery (see exhibit 14) are negatively impacting investors’ confidence. Furthermore, the political environment was not stable at the end of the year due to disagreements on the government force. Consumer spending is also declining, with consumption patterns being shifted in many key sectors, including the food one. Consequently, there is a significant weakness of Rand, which seems to be recovering over the last months, after January’s peak (see exhibit 15).
Impact of Macroeconomic Scenarios in Oceana
All these dynamics previously stated have different impacts on Oceana’s business. Firstly, the depressed consumer income lowers product sales (less expenditure), however this can be offset by the fact that consumers switch to a lower-cost protein source, such as fish. The weak rand has also distinct impacts on the operations of the company. Firstly, it increases the cost of imported raw fish on the canned fish Lucky Star division (50% of raw fish is imported in U.S. dollars). On the other hand, it benefits the exports of fishmeal and fish oil, horse mackerel, hake, lobster and squid, mainly to northern markets, given that those exports are more competitive. Finally, it is also beneficial for the commercial cold storage business, since there are more producers that need to keep their inventories, due to lower sales volumes (however this effect is likely to be a very short term one).
Segmental Report
Oceana’s operations are essentially divided into four different operating groups, which present different dynamics and structures, reproducing as well distinct impacts on the whole group. In terms of importance of each operating division, there are different aspects to refer to. By looking at exhibits 16 and 1714, one concludes that the inshore fishing division has been of higher importance to the group, contributing more than 60% per year for the total revenue and almost 50% of group’s EBIT (excluding the extraordinary year of 2013). The mid and deep water fishing importance on group’s revenue has been decreasing over time, fact that is also happening on its contribution to Oceana’s EBIT. Lastly, it is also possible to infer the impact that Daybrook had on the group. It is easier to confirm this effect on the FY2016 (the first year that results were included for the full year), with Daybrook contributing for more than 20% of revenues and
14
Daybrook 2015 results were included for the last three months of Oceana’s FY2015. Analysis of revenue growth and EBIT margins for each division is done in the breakdown analysis of each one.
Exhibit'13.'Platinum'Prices.
600# 700# 800# 900# 1000# 1100# 1200# 1300#
5/21/15# 6/21/15# 7/21/15# 8/21/15# 9/21/15#10/21/15#11/21/15#12/21/15# 1/21/16# 2/21/16#3/21/16# 4/21/16#
Pla$num(Prices(
Source:(Bloomberg.
Exhibit'14.'Real'GDP'Growth,'South'Africa.
!1.5%& 3.0%&3.2%&
2.2%& 2.2%&
1.5%&1.3%& 1.4%&1.6%& 1.6%&
!2.0%& !1.0%& 0.0%& 1.0%& 2.0%& 3.0%& 4.0%&
2009A& 2010A& 2011A& 2012A& 2013A& 2014A& 2015A& 2016E& 2017E& 2018E& Real&GDP&Growth,&South&Africa&
Source:(World(Bank.
Exhibit'15.'Exchange'Rate'USD/ZAR.
0.00# 2.00# 4.00# 6.00# 8.00# 10.00# 12.00# 14.00# 16.00# 18.00#
5/5/06# 5/5/07# 5/5/08# 5/5/09# 5/5/10# 5/5/11# 5/5/12# 5/5/13# 5/5/14# 5/5/15# Exchange)Rate)USD/ZAR)
OCEANA COMPANY REPORT
almost 40% of Oceana’s EBIT (this acquisition gave more profitability to the whole group, as we can see on the Daybrook segmental report).
Inshore Fishing (54% of FY16 Revenue, 40% of FY16 EBIT)
Within the inshore fishing division of Oceana it is important to make a distinction between the performance coming from (1) the selling of canned pilchards and fishmeal and fish oil (sold under Lucky Star brand) and (2) the selling of squid, lobster and French fries.
FoodCorp Acquisition
In the beginning of 2015, Oceana decided to acquire the fishing business unit of the South African FoodCorp company, including its pelagic fishing rights. This acquisition, in which Oceana paid R400mn, boosted Oceana’s percentage on the Total Allowable Catch (TAC) in certain resources. FoodCorp’s business is the catching, processing and selling of deep-sea trawl hake, south coast lobster and pelagic fish15.
Lucky Star (47% of FY16 Revenue, 36% of FY16 EBIT)
Lucky Star brand is focused on the catching and processing of small pelagic species, deriving from them final products that are sold under this brand to markets in Africa and under Glenryck brand to markets in France and UK. Its primary product is canned fish, mainly pilchards, but also tuna, sardines and mackerel. Besides the products sold under Lucky Star, this division also markets products under the Lucky Pet brand. Its main operations headquarters for canned fish are located in South Africa and in Namibia, where Oceana operates through Etosha Fisheries. Furthermore, this division also markets fishmeal and fish oil within the country and other international destinations, selling these products mainly as aquaculture feed and other animal feed sectors. Given the fact that the volumes that are actually landed are not enough to meet the needs of Lucky Star sales, the division also procures and
15
Due to lack of data, we could not present the financials of FoodCorp. However, the expected impact can be seen on the TAC tables for the resources in which the acquisition had actual impact. The acquisition worsened the problem with the competition and regulation authorities, in the sense that it gave additional quota to Oceana (and the S.A. and Namibian governments are concerned about the excess of quota concentration).
9
steel refrigerated seawater vessels in SA
3
steel refrigerated seawater vessels in Namibia
8
vessels wholly owned, co-owned or joint ventures
3
canneries 4
fishmeal plants
This movement is in line with the
goals previously set by the
management, given that Oceana
was importing a significant
percentage of inputs to support Lucky Star sales.
0%# 10%# 20%# 30%# 40%# 50%# 60%# 70%# 80%#
2012A% 2013A% 2014A% 2015A% 2016E%
Divisional%Contribu8on%to%Revenue,%2012<2016.%
Inshore%Fishing% Mid%and%Deep%Water%Fishing% C.C.S.% Daybrook%
0%# 10%# 20%# 30%# 40%# 50%# 60%#
2012A% 2013A% 2014A% 2015A% 2016E%
Divisional%Contribu8on%to%EBIT,%2012=2016.%
Inshore%Fishing% Mid%and%Deep%Water%Fishing% C.C.S.% Daybrook%
Exhibit'16.'Divisional'Contribution'to'Revenue,'2012:2016. Exhibit'17.'Divisional'Contribution'to'EBIT,'2012;2016.
OCEANA COMPANY REPORT
imports raw fish from other countries (Mexico, Morocco and other Asian countries). This division enjoys a strong position on the market having a penetration of 80% on S.A. households. It suffers competition from small private producers and other white brands, however the division has constructed a very strong brand and consumers are loyal to it.
Recent Past Outlook
This business unit was especially challenging for Oceana to control during the last few years, due to very distinct dynamics impacting the Lucky Star operations. Firstly, markets conditions in South Africa were tough, primarily explained by the depressed consumer demand and the negative impact that a weak rand had on the imports of raw fish to support the sales of the division. However it was offset by the acquisition of pelagic fishing rights from FoodCorp, which actually increased the amount of locally available fish. It is easy to confirm the impact that the acquisition had on the quota attributable to Oceana, mainly in the one referring to South African anchovy (which is the main input for fishmeal and fish oil production), by looking to the exhibit 22. Regarding the pilchards’ quota in South Africa and Namibia, we can corroborate that there was a slightly positive path on S.A. pilchards (see exhibit 20) and a negative path on the Namibian pilchards (see exhibit 21), which was likely a consequence of a conservative management of resource availability by the government and a potential overfishing status.
Future Outlook
The canned pilchards sub division is likely to highly benefit from the recent inflation on chicken prices in South Africa. This phenomenon, which is extremely correlated with the increase on maize prices, is expected to generate a shift on the consumption pattern, thus making consumers substitute chicken for fish (ST effect).
1. Increasing Chicken Prices
Chicken price has seen a significant increase due to the higher prices of its main inputs, such as maize. Since 2008 that the ratio between the price of pilchards (tinned) and the price of chicken portions (frozen) was not as high as it is currently (see exhibit 18) – see the peak on February 2016. At that date, a kg of frozen chicken portions was priced at R40.21, while a kg of pilchards was at R41.55 (see exhibit 19). Having this in mind, it is possible to conclude that the potential substitution effect is likely to happen. Given that (1) fish is a higher quality and healthier source of protein than chicken and (2) consumers perceive no difference in prices of both sources, they will tend to shift their consumption towards fish. It is also important to note that this effect is also expected to be a ST one.
This division absorbs roughly 70% of sales of canned fish in South Africa and other African markets.
In line with consumers’ lack of confidence and slow pace of growth on the economy…
Source:(STATS(SA,(BPI(Capital(Africa.
Prices'of'Different'Protein'Sources,'as'at'February'16 Price'(Rand'per'Kg)
Chicken(Portions((Fresh) 52.26
Chicjen(Portions((Frozen) 40.21
Polony 39.44
Fish(Fingers((Frozen) 67.84
Pilchards((Tinned) 41.55
Source:(STATS(SA,(BPI(Capital(Africa.
Indeed, recent news from late May reflected this anticipated shift on
consumption, when oceana
reported that volumes sold of canned fish increase by 10% on the first half of FY2016…
Exhibit'18.'Historical'Prices'Chichen'vs.'Pilchards'(ZAR'per'Kg).
Exhibit'19.'Prices'of'Protein'Sources,'February'2016'(ZAR'per'Kg). 0"
5" 10" 15" 20" 25" 30" 35" 40" 45"
2008A" 2009A" 2010A" 2011A" 2012A" 2013A" 2014A" 2015A" 2016A"
Historical*Prices*Chicken*vs.*Pilchards*(ZAR*per*Kg.)**
OCEANA COMPANY REPORT
2. ZAR depreciating
On the other hand, it is important to refer to Lucky Star’s revenue and cost base. A significant percentage of the costs (50%) are USD denominated, which negatively impacts its margins, because Oceana has to import at a higher cost. On the other hand, this negative impact on margins is not offset by the more competitive exports to France and UK (given that this volume is marginal relative to the all division).
3. Increased Quota
It is important to make the distinction between patterns across the three main inputs of this division. Indeed, one of the main value drivers of the company is the quota that the company has available, because they represent the fishing opportunities, and then the possibilities of catching fish and generate sales.
South African Pilchard
In the period 2012-2015, the TAC attributable to Oceana grew at a CAGR of 6.44%. Recent news from late May appointed that Oceana was able to increase the fish processed locally (own quota) on the first half of 2016. We are expecting a ST effect on that percentage, hence we assumed it to increase 5%
yoy, number that will grow 0.5% yoy until 2020, when it is assumed to stabilize. On the other hand, as more own quota is processed, there is a lower need to purchase additional quota (which is expensive). Therefore, the percentage of contracted quota relative to the TAC is assumed to remain constant at 18%. Given that this resource has been managed conservatively we assumed a yoy
growth of 2% on the TAC (see exhibit 20).
Namibian Pilchard
Regarding the pilchard sourced in Namibia, figures are relatively different from the ones found previously. Oceana’s TAC grew at a CAGR of -9% during 2012-2015, largely driven by a general decrease on the TAC attributed by the government. The resource has been conservatively managed (following government concerns about fish scarcity and possible overfishing status of species) for a number of years, with low TACs. Therefore we will attribute a 1.5% yoy growth over the ST and LT (see exhibit 21).
Driven by the inclusion of
FoodCorp recently acquired
fishing rights, which increased the percentage of TAC directly owned by Oceana, from 15%, in 2014, to 25.6%, in 2015.
The net effect of a depreciating ZAR is negative for the division, which can narrow margins…
We were conservative on the TAC attributed by the Minister of
Agriculture, Forestry and
Fisheries, following DAFF
scientists recommendations…
South&African&Pilchard&TAC&(in&tons) Oceana's(Own(Quota
YoY#Growth as#%#of#Total
Oceana's(Contracted(Quota YoY#Growth
as#%#of#Total
Other(than(Oceana(Quota YoY#Growth
as#%#of#Total Total YoY#Growth
Total&Attributable&to&Oceana YoY#Growth
as#%#of#Total
2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
14,447
(((((((( ((((((((((((((13,508 ((((((((((((((13,500 ((((((((((((((21,368 ((((((((((((((26,053 (((((((((((((27,008 (((((((((((((27,991 ((((((((29,003 ((((((((30,043
12% 16% 0% 58% 22% 4% 4% 4% 4%
14% 15% 15% 26% 31% 31% 32% 32% 33%
15,731
(((((((( ((((((((((((((16,215 ((((((((((((((16,200 ((((((((((((((15,025 ((((((((((((((15,325 (((((((((((((15,632 (((((((((((((15,944 ((((((((16,263 ((((((((16,588
3% 0% 17% 2% 2% 2% 2% 2%
16% 18% 18% 18% 18% 18% 18% 18% 18%
70,417
(((((((( ((((((((((((((60,277 ((((((((((((((60,300 ((((((((((((((47,077 ((((((((((((((43,762 (((((((((((((44,203 (((((((((((((44,644 ((((((((45,085 ((((((((45,526
114% 0% 122% 17% 1% 1% 1% 1%
70% 67% 67% 56% 51% 51% 50% 50% 49%
100,595
&&&&& &&&&&&&&&&&&&&90,000 &&&&&&&&&&&&&&90,000 &&&&&&&&&&&&&&83,470 &&&&&&&&&&&&&&85,139 &&&&&&&&&&&&&86,842 &&&&&&&&&&&&&88,579 &&&&&&&&90,351 &&&&&&&&92,158
12% 111% 0% 17% 2% 2% 2% 2% 2%
30,178
&&&&&&&& &&&&&&&&&&&&&&29,723 &&&&&&&&&&&&&&29,700 &&&&&&&&&&&&&&36,393 &&&&&&&&&&&&&&41,378 &&&&&&&&&&&&&42,640 &&&&&&&&&&&&&43,935 &&&&&&&&45,266 &&&&&&&&46,632
12% 0% 23% 14% 3% 3% 3% 3%
30% 33% 33% 44% 49% 49% 50% 50% 51%
CAGR&12G15 CAGR&16G20
13.94% 3.63%
G1.52% 2.00%
G12.56% 0.99%
G6.03% 2.00%
6.44% 3.03%
Exhibit'20.'South'African'Pilchard,'TAC'(in'tons),'2012>2020.
Oceana’s attributable TAC will grow at a 1.74% CAGR in the period 2016-‐2020…
OCEANA COMPANY REPORT
South African Anchovy
Oceana’s quota for the main input for fishmeal and fish oil production increased at a CAGR of 39.37% during the period 2012-2015, explained by the inclusion of pelagic fishing rights from the FoodCorp acquisition. As we can easily confirm on exhibit 22, Oceana’s own quota increased by 32%, on 2015, due to this operation. We will assume a 2% yoy growth rate on TAC attributed by the government, to reflect that the resource is not overfished.
4. Volumes Growth
Assuming the growth rates from the TACs analysis, we have forecasted volumes sold for canned pilchards and fishmeal and fish oil, which will drive revenue (see exhibit 23).
In order to define the yoy growth rates, we have assumed the growth rates forecasted for the quota attributable to Oceana in each fish species. For the canned fish sub-division, we have assumed this growth to be split on a weighted basis, attributing 70% for the growth on South African pilchard’s TAC attributable to Oceana and the remaining 30% to the growth in Oceana’s quota
Namibian'Pilchard'TAC'(in'tons) Oceana's(Own(Quota YoY#Growth as#%#of#Total Oceana's(Contracted(Quota YoY#Growth as#%#of#Total Other(than(Oceana(Quota YoY#Growth as#%#of#Total Total YoY#Growth Total'Attributable'to'Oceana YoY#Growth as#%#of#Total
2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
9,912
(((((((((( ((((((((((((((((7,975 ((((((((((((((((6,240 ((((((((((((((((5,200 ((((((((((((((((5,278 (((((((((((((((5,357 (((((((((((((((5,438 ((((((((((5,519 ((((((((((5,602
98% 120% 122% 117% 1% 1% 1% 1% 1%
32% 32% 21% 21% 21% 21% 21% 21% 21%
7,066
(((((((((( ((((((((((((((((4,149 ((((((((((((((((9,120 ((((((((((((((((7,600 ((((((((((((((((7,841 (((((((((((((((8,087 (((((((((((((((8,209 ((((((((((8,332 ((((((((((8,457
141% 120% 117% 3% 3% 1% 1% 1%
23% 17% 30% 30% 31% 31% 31% 31% 31%
14,022
(((((((( ((((((((((((((12,876 ((((((((((((((14,640 ((((((((((((((12,200 ((((((((((((((12,256 (((((((((((((12,311 (((((((((((((12,496 ((((((((12,683 ((((((((12,874
18% 14% 117% 0% 0% 1% 1% 1%
24% 52% 49% 49% 48% 48% 48% 48% 48%
31,000
'''''''' ''''''''''''''25,000 ''''''''''''''30,000 ''''''''''''''25,000 ''''''''''''''25,375 '''''''''''''25,756 '''''''''''''26,142 ''''''''26,534 ''''''''26,932
24% 119% 20% 117% 2% 2% 2% 2% 2%
16,978
'''''''' ''''''''''''''12,124 ''''''''''''''15,360 ''''''''''''''12,800 ''''''''''''''13,119 '''''''''''''13,444 '''''''''''''13,646 ''''''''13,851 ''''''''14,059
129% 27% 9% 2% 2% 2% 1% 1%
55% 48% 51% 51% 52% 52% 52% 52% 52%
CAGR'12G15 CAGR'16G20 G19.35% 1.50% 2.46% 1.91% G4.53% 1.24% G6.92% 1.50% G8.99% 1.74% South&African&Anchovy&TAC&(in&tons) Oceana's(Own(Quota YoY#Growth as#%#of#Total Oceana's(Contracted(Quota YoY#Growth as#%#of#Total Other(than(Oceana(Quota YoY#Growth as#%#of#Total Total YoY#Growth Total&Attributable&to&Oceana YoY#Growth as#%#of#Total
2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
59,100
(((((((( ((((((((((((((77,766 ((((((((((((160,001 ((((((((((((211,170 ((((((((((((215,393 (((((((((((219,701 (((((((((((224,095 (((((228,577 (((((233,149
/10% 32% 106% 32% 2% 2% 2% 2% 2%
17% 17% 36% 47% 47% 47% 47% 47% 47%
59,624
(((((((( ((((((((((((((88,256 ((((((((((((108,000 ((((((((((((110,250 ((((((((((((117,045 (((((((((((124,068 (((((((((((126,549 (((((129,080 (((((131,662
48% 22% 2% 6% 6% 2% 2% 2%
17% 20% 24% 25% 26% 27% 27% 27% 27%
233,944
((((( ((((((((((((283,978 ((((((((((((181,999 ((((((((((((128,580 ((((((((((((126,562 (((((((((((124,411 (((((((((((126,899 (((((129,437 (((((132,026
21% /36% /29% /2% /2% 2% 2% 2%
66% 63% 40% 29% 28% 27% 27% 27% 27%
352,668
&&&&& &&&&&&&&&&&&450,000 &&&&&&&&&&&&450,000 &&&&&&&&&&&&450,000 &&&&&&&&&&&&459,000 &&&&&&&&&&&468,180 &&&&&&&&&&&477,544 &&&&&487,094 &&&&&496,836
/10% 28% 0% 0% 2% 2% 2% 2% 2%
118,724
&&&&& &&&&&&&&&&&&166,022 &&&&&&&&&&&&268,001 &&&&&&&&&&&&321,420 &&&&&&&&&&&&332,438 &&&&&&&&&&&343,769 &&&&&&&&&&&350,644 &&&&&357,657 &&&&&364,810
40% 61% 20% 3% 3% 2% 2% 2%
34% 37% 60% 71% 72% 73% 73% 73% 73%
CAGR&12G15 CAGR&16G20 52.88% 2.00% 22.74% 2.99% G18.09% 1.06% 8.46% 2.00% 39.37% 2.35% Source:(Company(Data(and(Analyst(Estimates. Inshore(Fishing(,(Volumes(Sold( Canned&Fish&(in&thousands&of&cartons) YoY#Growth as#%#of#Total FishMeal&and&FIshOil&(in&tons) YoY#Growth as#%#of#Total
2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
8,639
&&&&&&&&&& &&&&&&&&&&&&&&&&8,600 &&&&&&&&&&&&&&&&8,600 &&&&&&&&&&&&&&&&8,300 &&&&&&&&&&&&&&&&9,158 &&&&&&&&&&&&&&&9,422 &&&&&&&&&&&&&&&9,664 &&&&&&&&&&9,913 &&&&&&&&10,167
0% 0% 03% 10% 3% 3% 3% 3%
12% 17% 14% 12% 13% 13% 13% 13% 13%
41,968
&&&&&&&& &&&&&&&&&&&&&&20,958 &&&&&&&&&&&&&&33,831 &&&&&&&&&&&&&&40,575 &&&&&&&&&&&&&&41,966 &&&&&&&&&&&&&43,396 &&&&&&&&&&&&&44,264 &&&&&&&&45,149 &&&&&&&&46,052
050% 61% 20% 3% 3% 2% 2% 2%
60% 42% 54% 58% 58% 58% 58% 57% 57%
CAGR(12,15 CAGR(16,20 ,1.33% 2.65%
,1.12% 2.35%
Forecasted 16-‐20 CAGRs of 2.65% and 2.35% for the canned fish and fishmeal and fish oil divisions, respectively…
Exhibit'21.'Namibian'Pilchard,'TAC'(in'tons),'2012=2020.
Exhibit'22.'South'African'Anchovy,'TAC'(in'tons),'2012=2020.
Exhibit'23.'Lucky'Star,'Volumes'Sold,'2012=2020.
Oceana’s attributable TAC will grow at a 2.35% CAGR in the period 2016-‐2020…
OCEANA COMPANY REPORT
of Namibian pilchard. Regarding fishmeal and fish oil, we have assumed the growth rate on the anchovy’s total quota attributable to Oceana16.
5. Historical and Forecasted Operational Performance
Considering all the drivers that we have seen previously, the operating performance was forecasted as follows in the exhibit 24.
The volume growth is driven on a weighted average by the volumes growth in canned fish (75%) and fishmeal and fish oil divisions (25%). On the other hand, price growth is based on the assumption that increased chicken prices will allow Oceana to push prices higher without scarifying volumes sold (on the ST). Therefore, the price growth is assumed to be the conservative 3% S.A.R.B.17 inflation target for the S.A. economy plus a pricing power of 5% in the first forecasted year (2016). This pricing power is reduced by 1% until 2021, when this growth stabilizes at the 3% inflation target plus 1% pricing power. Over the period 2016-2020, these growth drivers will generate a CAGR of 8.21% (see exhibits 24 and 25).
Regarding operating efficiency, and following the recent news that Oceana was able to process more fish locally (therefore having lower costs on importing pilchards to support the sales of the divisions), it is expected that operating margin increases slightly on the very short term (1% to 2%), stabilizing afterwards at the 14% (see exhibits 24 and 26). Therefore, EBIT is forecasted to grow at a CAGR of 6.39% during the period 2016-2020.
6. Balance of Risks and Opportunities
When doing this exercise it is important to consider a balance of points that can affect both negatively and positively the creation of value.
Risks Opportunities
- Erosion of margins due to a weak ZAR, given that 50% of pilchards
sold are still imported;
- Loss of contracted quota or higher costs on purchasing that quota;
- Path of consumers shift to more expensive proteins when disposable
income increases;
- Possible competition from private label canned pilchards;
- Possibility of not catching all quota;
- Insufficient fleet and fishmeal processing capacity.
- Higher maize price, thus higher chicken price and then potential
substitution effect, supporting both demand and pricing increases;
- Inclusion of FoodCorp fishing rights for the full year for the 1st time;
- No apparent scarcity or overfished status of pilchards and/or anchovy;
- Strong Lucky Star brand equity, capturing 70% of market share, with
pricing power;
- Potential reduction of costs on imports of raw fish, driving efficiencies;
- Potential development of the division on other African countries.
16
Forecasted yoy growth rates on volumes sold are dependent on the growth rates of TAC attributable to Oceana. We could have used landings to drive revenue, however this last indicator is a much more volatile one. Moreover, as we can confirm on the company’s financial statements, almost all divisions can actually catch their own annual quota by the end of the season.
17
S.A.R.B. – South African Reserve Bank.
Canned&Fish&and&Fish&Meal&(R'000) Revenue
YoY#Growth !"!Price!Growth !"!Volume!Growth
2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
2,582,636
'' '''''2,631,686 ''''''''''''3,086,476 ''3,408,988 ''''''''''3,998,650 ''4,407,399 '''''''''4,785,500 ''5,146,742 ''5,482,249
2% 17% 10% 17% 10% 9% 8% 7%
8% 7% 6% 5% 4%
9% 3% 2% 2% 2%
CAGR&12@15 CAGR&16.20
9.70% 8.21%
EBIT YoY!Growth EBIT!Margin
318,941
''''' '''''''''214,914 '''''''''''''''380,931 ''''''452,504 ''''''''''''''610,748 ''''''673,180 ''''''''''''683,075 ''''''734,638 ''''''782,528
"33% 77% 19% 35% 10% 1% 8% 7%
8% 12% 13% 15% 15% 14% 14% 14%
12.37% 6.39%
Source:(Company(Data(and(Analyst(Estimates.
2%# 17%#
10%# 17%#
10%# 9%#
8%# 7%#
0%# 2%# 4%# 6%# 8%# 10%# 12%# 14%# 16%# 18%# 20%#
2013A# 2014A# 2015A# 2016E# 2017E# 2018E# 2019E# 2020E# Lucky#Star#Revenue#Growth#(%)#
8%# 12%# 13%#
15%# 15%#
14%# 14%# 14%#
0%# 2%# 4%# 6%# 8%# 10%# 12%# 14%# 16%# 18%#
2013A#2014A#2015A#2016E#2017E#2018E# 2019E#2020E#
Lucky#Star#EBIT#Margin#(%)#
Source:(Company(Data(and(Analyst(Estimates. Source:(Company(Data(and(Analyst(Estimates.
Exhibit'24.'Lucky'Star,'Operating'Performance.
Exhibit'25.'Lucky'Star,'Revenue'Growth'(%),'2013A2020.
OCEANA COMPANY REPORT
Lobster, Squid and French Fries (7% of FY16 Revenue, 4% of FY16 EBIT)
This operating division is composed by three separate business units that are focused on the catching, processing, and selling of west and south coast rock lobster and squid, and the processing and marketing of French fries. In terms of competitive environment, Oceana faces competition from other private fishing companies such as Premier Fishing Group. All companies producing these products have a scarcity pricing power due to the resource scarcity.
Recent Past Outlook
For Oceana, this operating division delivered sound performance in 2015, in line with the pattern of the last years. Despite the fact that lobster quota attributable to Oceana has been in a decreasing trend and that the resource reserves are low, the division was able to catch almost all its quota (see exhibit 27). Regarding the squid business, Oceana has done well, coming back to profit figures after a year of increased quota (pushed by more contracted quota) available and sizeable landings (see exhibit 28). Despite the fact that it is not a key division for Oceana, French fries business returned as well to profit figures.
Future Outlook
The future figures of this division will be essentially driven by the supported demand on its core export markets and by a depreciation on ZAR, given the fact that almost all revenues are priced whether in USD or EUR.
1. Quota Evolution
Quota evolution on both lobster and squid segments has been sluggish for Oceana, showing similar patterns of slightly positive to neutral growth.
Lobster TAC
During the period 2012-2015, Oceana’s attributable quota has grown at a negative CAGR of 5.47%, which is in line with CAGR of the total quota available (-9.44%). For the FY2016, we have assumed the same 7% yoy
growth expectation of Oceana about the TAC attributed by the government. Nevertheless, for the following years, we assumed a 1% yoy growth up to 2020, growing afterwards at a 0.5% yoy rate (see exhibit 27).
10 west coast lobster vessels
1 south coast lobster vessel
5 freezer vessels for squid
4 lobster facilities
1
French fries processing plant
Lobster(TAC((in(tons)
Oceana's(Own(Quota YoY#Growth as#%#of#Total
Oceana's(Contracted(Quota YoY#Growth
as#%#of#Total
Other(than(Oceana(Quota YoY#Growth
as#%#of#Total
Total
YoY#Growth
Total(Attributable(to(Oceana
YoY#Growth as#%#of#Total
2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
327
((((((((((((( (((((((((((((((((((328 (((((((((((((((((((288 (((((((((((((((((((238 (((((((((((((((((((254 ((((((((((((((((((257 ((((((((((((((((((259 (((((((((((((262 (((((((((((((265
1% 0% 112% 117% 7% 1% 1% 1% 1%
13% 13% 13% 13% 13% 13% 13% 13% 13%
201
((((((((((((( (((((((((((((((((((180 (((((((((((((((((((324 (((((((((((((((((((208 (((((((((((((((((((222 ((((((((((((((((((224 ((((((((((((((((((227 (((((((((((((229 (((((((((((((231
110% 80% 136% 7% 1% 1% 1% 1%
8% 7% 15% 12% 12% 12% 12% 12% 12%
1,897
(((((((((( ((((((((((((((((1,924 ((((((((((((((((1,555 ((((((((((((((((1,355 ((((((((((((((((1,447 (((((((((((((((1,462 (((((((((((((((1,476 ((((((((((1,491 ((((((((((1,506
1% 119% 113% 7% 1% 1% 1% 1%
78% 79% 72% 75% 75% 75% 75% 75% 75%
2,425
(((((((((( ((((((((((((((((2,432 ((((((((((((((((2,167 ((((((((((((((((1,801 ((((((((((((((((1,923 (((((((((((((((1,943 (((((((((((((((1,962 ((((((((((1,982 ((((((((((2,002
6% 0% 111% 117% 7% 1% 1% 1% 1%
528
((((((((((((( (((((((((((((((((((508 (((((((((((((((((((612 (((((((((((((((((((446 (((((((((((((((((((476 ((((((((((((((((((481 ((((((((((((((((((486 (((((((((((((491 (((((((((((((496
14% 20% 127% 7% 1% 1% 1% 1%
22% 21% 28% 25% 25% 25% 25% 25% 25%
CAGR(12C15 CAGR(16C20
C10.05% 1.00%
1.15% 1.00%
C10.61% 1.00%
C9.44% 1.00%
C5.47% 1.00%
Given increasing concerns on
resource availability and
conservative government
measures.
Oceana’s TAC is expected to grow at a 1% CAGR, during 2016-‐2020…
Source:(Company(Data(and(Analyst(Estimates.
Exhibit'27.'Lobster,'TAC'(in'tons),'201292020.
These are premium products, in which consumers have to face the prices defined by companies…
Steady behavior in Oceana’s core
exports markets and more
competitive exports, given